GST would apply if a rented residential building is sublet as hostel: AAAR

Residential properties taken on rent by families or individuals for own use exempted

Renting residential buildings to commercial entities that sublet them to educational institutions as hostels will invite goods and services tax (GST).

The Andhra Pradesh Appellate Authority for Advance Rulings (AAAR) has confirmed the AAR order in this matter.

AAAR ruled that such an arrangement is not exempted from GST via a notification issued by the Centre. The notification, amended in July last year, exempted residential properties taken on rent by families or individuals from GST but not by commercial entities.

The exemption to families or individuals was on the grounds that the transaction of supply ends with the recipient. However,